Apple Stock Falls 6 Percent Following iPhone Event

New iPhones, same 4-inch display

The trouble with being a mega-company like Apple is that the bar is eventually too high. It certainly seemed that way when Apple unveiled the iPhone 5, a modest upgrade to the iPhone 4S, though at least it introduced a much needed bump in screen size. Yesterday, however, rumors of an even larger size iPhone were debunked when Apple trotted out a pair of new iPhone models still featuring a 4-inch display. A day later, the company's stock is taking a beating.

In case you missed it, Apple on Tuesday introduced the iPhone 5S and 5C. The 5S model is an upgraded device with a 64-bit A7 processor (the first smartphone ever to have a 64-bit CPU), better optics, a fingerprint reader embedded into the Home button, and some new color options like gold.

The iPhone 5C takes the place of the iPhone 5 with a starting price of $99, but it's made of colorful polycarbonate plastic with a steel reinforced frame that doubles as an antenna. It's available in a variety of colors like the iPod touch.

Apple may have made two mistakes here, one for each device. First, it seems the public wants a bigger display, and if Apple needs proof of that, it need only look at Samsung and how well it's Galaxy line sells. The 5S didn't deliver, and while the 64-bit CPU is cool, only tech savvy users are likely to be geeked about that.

Secondly, the iPhone 5C is priced too high. Apple is choosing to make money straight away from iPhone 5C sales rather than aggressively go after market share that it lost to Android. Imagine if Apple priced the iPhone 5C at $50 or even free on a two-year contract. That probably would have swayed potential Android buyers into jumping ship, the hardcore anti-iOS crowd notwithstanding.

As a result of those mistakes, or perhaps because the expectation is so high these days, Apple's share price is down around $28 today, or about 6 percent. The company is still worth hundreds of billions of dollars, but if you're an investor, this is not wanted you wanted to wake up to in the morning.

What do you think about Apple's new iPhone models? Do you agree that they're overall underwhelming, or are the expectations too high?

Comments

I don't think there's any question that the new iPhone is a pretty good improvement over the iPhone 5. The problem here is figuring out what would compel you to buy it.

You can fall into one of two categories when purchasing an iPhone, those who are upgrading from an existing iPhone and those who are purchasing a new iPhone.

If you are in category 1, those who are upgrading... why upgrade? I've heard no end of iPhone users ranting about how it "just works" or about how the performance on their phone seems better to them than the performance of devices whose spec's blow the doors off the iPhone 5. It's clear that these people like their current device. In all honesty, I think most people who like an iPhone enough to upgrade to a new one like their current iPhone enough not to.

Why does it matter if the performance of the new iPhone is 100 times that of its predecessor (which its not) if the predecessor performs just fine. It needs to do something new to create a need for all that extra performance. And that's where the new iPhone falls terribly short. It really doesn't do anything new. As far as functionality goes, there just isn't anything really compelling that screams, "I must upgrade to this device."

And when all is said and done it will all look the same on the same screen. Simply having a bigger screen or (if you buy that the size is already optimal) increasing the screen resolution might convince plenty more people to upgrade. Apple spent a lot of time and marketing convincing their customers that their "retina display" added unprecedented value to the device. The fact that the same dated technology has been pushed forward to the next iPhone cannot be creating very much excitement. Besides, their nonstandard screen resolution will always create compression artifacts in every video watched on the device. There are no video encoders that downscale (or upscale) nicely to their wonky resolution. A company that prides itself on catering to the graphics and video editing crowd should know better.

If you fall into category 2, those buying a new phone, a free iPhone 4s with contract or an iPhone 5 at a good price on ebay might prove compelling for many of the reasons listed above. I think the big thing is that Apple will have a hard time convincing people that the iPhone 5s really does anything new.

I'm sure these things will sell like hot cakes anyway. Fads always do until they bust. But I think investors are worried that without really compelling new features the improved hardware won't be enough to keep the fad from busting this time around.

indeed. other companies had to rush and perhaps even prematurely release smart watches before apple in attempts to dodge being sued. we all know that apple invented smart watches. i read the comment sections of alot of sites to humor myself from the retardation that is apple fanatics. ALOT and i mean ALOT of people are saying samsung, google, etc have already pre-copied apple by releasing a smart watch

It appears as though Apple is marketing these little pretend phones to children. Too bad the OS is fully uncustomizeable (is that even a word?) and very expensive for the returned value compared to the rest of the market. With that being said, many iDiots will still flock to these things like Heaven's Gate cultists. Welcome to Hale-Bopp.

indeed. i couldn't wipe the smile off my face all day watching that price drop further and further. this couldn't have happened to a more deserving company. hopefully it drops even further once ios7 is released and investors realize that it is a slavishly blatant (two of crapple's legal team's favorite words) of windows phone 8 and android. i'd love to see how fast good ol stevie is spinning in his grave

Yea me too. Hopefully they further devalue and go out of business so tens of thousands of more Americans will be without good paying jobs and we can negatively impact the US economy. That way we can send all of our money overseas and complain about the outsourcing of our technology jobs. Yay!

Yea, I'm sure the horse and buggy people were spouting the same propaganda at the advent of the automobile. But surprisingly Americans managed to create jobs for themselves despite the demise of an entire industry. Look, I'm all for American jobs, but that doesn't mean that I have to be in favor of businesses that abuse the market place just because they provide some jobs. In many ways (though not all) Apple is a big impediment that I wish would get out of the way. Whether they change their business practices for the better or go out of business makes little difference to me. The removal of anti-competitive practices from the market place will inevitably create more jobs than it will destroy.

But on the flipside, I do see one plus to the new iPhone- that 64 bit processor. It doesn't even come close to making the phone attractive to me, but it does spawn the hope that other manufacturers will hurry to incorporate 64 bit processors into their devices. For once, I can actually see Apple doing something that resembles healthy competition.

The problem here isn't Apple. The problem solely rests on the shoulders of the system that created the dynamic. At the end of the day, there isn't a single company out there that doesn't participate in the same or similar business practices. Business is about turning a profit, otherwise you'd be a charity.

You think siphoning hundred of billions of dollars out of the American economy and putting into the untaxed Cayman bank accounts of a few execs IN EXCHANGE for a few crummy phones and some dumb-ass geek-squad wanna-bee jobs -- you think that qualifies as "helping the American economy"? WTF are you smoking bro?

All while enslaving Chinese workers and paying them 1$ a day ? RIIIGHT.

if you think crapple helps the us economy in anyway, you are sadly mistaken. sounds like you received your "facts" from the comment section on yahoo stories dealing with apple as everyone there thinks that apple is an "american" company. yeah silly me. i forgot about all those poor highly qualified "jeenyuses" that crapple is so proud of. surely they could use their expertise and knowledge at the local walmart to be able to continue to help the poor saps that requires their "services"

You must be a blast at parties. Since you obviously live in your parent's basement, here is a little bit of education from the people who actually know what they're talking about and back it up with real data:

sorry guy but i'm interested in tech news not finances of corporations. as an avid crapple fanatic with supposedly vast riches and unfathomable knowledge, you of all people should know about the evil "american" corp of apple. they have to employee x amount of people to comply with tax codes that they love and lobby congress to change the codes that don't benefit them. i'd love to be able to dodge BILLIONS and BILLIONS of dollars in taxes based through Ireland. they go the extra mile of even becoming buddy buddy with the president and getting him to overturn their product bans.

The problem here is a lot of people were expecting a far lower price point on the 5C. If Apple really wanted to retake some market share back from Android, they should have put the 5C out as a 200 to 300 dollar no contract phone. Now that we can get the Nexus 4 for 200 bucks, or a Lumia 520 for that or less, both out of contract, selling the iPhone 5C for 550 is flat out ridiculous.

Surprisingly little Apple hate here today. I guess it's because that we've been expecting this for quite some time, and there were really no huge surprises at this year's reveal. Small changes, which are nice, but not a huge deal. This is obviously reflected in the stock prices, where shareholders are expecting something "revolutionary" from anything Apple puts out.

What puzzles me is how Apple's going to be able to sell its iPhone 5C. Sure, people will still buy it since it's an Apple product, but from what I've seen out in public, people usually don't settle for the "lesser" Apple product. Apple sustains a culture of producing the best as much as possible, and adding an "inferior" option seems rather contrary to their belief.

From what I gather, Apple products are more of a culture thing than anything else. They scream "high-end" to the non-tech savvy. However, I don't know if people want to be seen with the lower-end iPhone (even though it really isn't that much worse than the iPhone 5S), specially since the mass tech media has billed the 5C as a "budget" iPhone. I really don't see anything wrong with the 5C. As a matter of fact, I think it's rather nice. But I don't think it'll sell well.

the macolytes don't want to be seen or associated with the "lower-end" iphone due to being looked down on. it also looks very similar to nokia windows phones and lord jobs/cook wouldn't want their followers to be confused with any vastly inferior product other than the shiny apple. i think this whole "budget" phone is just a ploy to get consumers to buy the slighty pricier 5s. the 5c is just a move to satisfy all the big wig investors crying for more market share in less developed countries. the 5c is basically a 5 with plastic and is even cheaper to make. therefor they choose to take the risk of selling more 5c in hopes of actually selling the more expensive 5s due to the slight difference in price

While I do think these updates are incremental in nature, (I laughed at some of my Apple loving friends who seemed to think these improvements were still a really big deal) I still will probably stick with using iOS for my phone. Why? well, I do consider myself a "power user" and I do want full control on my PC. But on my phone? That's just for text messages, checking my email, casual browsing, and a few apps. I just want something that works and I don't want to have to think about it. Apple is good at making a slick product that does just that. I hate using Apple products for most anything else, but they do a good job at what they do, and honestly, that's all a lot of people need.

Women don't want a larger phone, being out there in the field daily I am constantly told that the iPhone is perfect for the purse and is light enough. So many people have told me when they switched to Samsung Galaxy S3 or S4 they almost immediately regretted moving from iPhone.

Apple realizes this, and they also realize that for years we had been trying to make phones smaller, and now they're just getting bigger again. We don't want a phablet, we want a phone.

And once again, Apple is going to make billions of dollars with these new products, more than Samsung or Google have ever made with their copycats.

iPhone user's noses are always stuck to the screen because that screen is so damn small. Far from perfect. Most women here love their S3, S4's because Facebook, Twitter and imgur look prettier. The iFems see this big, beautiful screen and just get catty and jealous.

Yeah. I think that the iPhone is actually too big. There was a time when having the smallest phone was fashionable... they went waaaay too far and got way too tiny, but I miss my Nokia 5310 like I'd miss a dead brother. It was the perfect size. I'm glad the iPhone isn't getting bigger.

I like the new Apple iPhone I like their products and I will admit for more than a decade I bad mouthed & complained about the price of their products. However, this last year has been a good year for me financially and I was able to buy my first Macbook Pro and iPod, and I must say they make a high quality product well worth the price. Because of this I am moving from the Galaxy Nexus to an iPhone next month.
Now as for the stock drop I believe this is a bunch of old men sitting around that heard that Apple is now trying to break into the low end market and gotten a little scared. Everyone knows at this point the smartphone market is becoming saturated and the high quantity sales Apple has had for the last several years cannot be maintained. Now combine that with the more affordable iPhone and those cranky old guys get stingy with the money and start selling because they are sure as hell afraid of change in tech and even the thought of any kind of financial loss can not be tolerated so "Sell, Sell, Sell! Sell now!"

It's simpler than that. Apple introduced the iPod and created the first A list content market selling music. They expanded into the iOS world on the iPod touch, iPad and iphone. Their market became Apps, Ads, and Content. Apple sees this as the future.

However Apples history is expensive Macs. They sold Macs at a premium price held a market niche at 5-10 or so and made bank.

Now that they are in the iOS market business with Apps, Ads, and Content they are pricing their products like they are still in the Niche market instead of the "We need iOS market share" game.

As a result their market share has dropped from 90% of the Post PC mobile OS market to about half. Apples long term prospects have also dropped as a result.

The A6 was a custom design by Apple. It was basically a mid point between the A9 and A15. Apple's probably done something similar this time around as well, if the server centric A57/53 are as/more power hungry than the A15, which is quite likely IMO.

Apple's share price has always been about the "bling" Apple has had with the investors. There was no earthly reason for such a high market capitalization (the largest US company in valuation). Take away any of the shiny, and it is just another tech company manufacturing goods in a overly crowded marketplace. Any news, good or bad, will subsequently lead to large changes in the stock price.

I will give the company credit for doing a pretty good job with the iPod. Maybe not an innovation (I had a Diamond Rio when they first came out). However, they made MP3s mainstream. iTunes was a good paradim shift.

The iPhone and iPad are annoyingly limiting. However I still recommend them to non-tech folks that I don't want to support post-sale myself. Sooooo, there's that.

For tech-folks, I recommend anything but Apple if they want versatility.

Sorry but Apple is not some Godlike company with products worth their weight in gold. They are mediocre at best with high price tags that only the moron will pay eagerly. I may run OSX in a triple booted testing box but that's only to work with Windows and OSX as the two mainstream OSes with linux as the third for good measure in order to stay current.

For a company that clams to be the king of innovation, they sure haven't done any innovations here. All they did was put a 64 bit processor and fihgerprint reader into it and slap a price tag on it. Looks like Apple has finally joined the Fail Wagon. It's about time.

Preach on, Mikey. This release is an incremental improvement, at best.

I wasn't aware that the 32-bit proc in the current iPhones was horribly limiting. Apart from being faster (technically), I just don't get it.

Fingerprint reader? Really? My concerns are not the security of the device itself. It seems reasonably secure. My concerns are the security of GPS location info, online activity, etc. Basically, the security at the other end of the connection. What's Apple doing about that?